Every deal your company proposes to do – big or small, strategic or tactical – should start with a clear statement how that particular deal would create value for your company. We call this the investment thesis. The investment thesis is no more or less than a definitive statement, based on a clear understanding of how money is made in your business, that outlines how adding this particular business to your portfolio will make your company more valuable. Many of the best acquirers write out their investment theses in black and white. Joe Trustey, managing partner of private equity and venture capital firm Summit Partners, describes the tool in one short sentence: “It tells me why I would want to own this business.”
Pedro Torres-Picon of Quotidian Ventures delivered a great talk a couple weeks ago at the Pre Money Conference on “How To Build An Investment Thesis”. Pedro does an excellent job of explaining it with some quotes from Fred Wilson and prominent others.
Here is the slidedeck from Pedro’s talk for your reference.